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Category Archives: Economy

Time to get our federal ducks in a row. (These are actually Peeps in a planter here at work.)

I’m disappointed. I expected a little more truth out of Obama.

There he was – addressing the very spend-thrifts and regulation-removers who caused the present situation, and all he could muster was a wimpy “Now, if we’re honest with ourselves, we’ll admit that for too long, we have not always met these responsibilities [to not spend more than we have] – as a government or as a people.” (Reminder, the government is of the people, for the people and by the people.)

Humans are weak when faced by temptations, such as a whole boatload of money. When we hear the magic words, “Federal funds,” we don’t ask questions about where the money is actually coming from or how it will ever in a million years be repaid, we just start making our greedy plans about what we’re going to do with and who is charge of doling it out. As if it were money from heaven and not a loan from the Chinese and the oil sheiks

The ultimate irony for me was a former member of Congress telling Congress that things are going to be different from now on. I’m sorry, but that’s impossible. All the same people who forced Fannie Mae and Freddie Mac to buy questionable home loans (stupid buyers) so more low-income housing could be created are still chairmen of those committees. The same representatives who voted to loosen regulations are still collecting campaign funds from the industries they served.

The very idea that Obama could get anything out of Congress other than what Congress (meaning the new Democratic majority running things) has always delivered — pork-barrel spending, massive Federal debt, wasteful weapons systems, unfair agricultural subsidies — is both saddening and maddening.

I just pity the people who expect to live off their savings when the dollar becomes worth a tenth or a hundredth of what it is now, when we don’t have enough of our inflated dollars to buy any oil, and when nobody comes to the weekly Treasury auctions to buy our worthless debt. Then we might get the truth out of Congress, that passing the buck is the only game they know, and taxing the rich is their only solution.

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You need to regard anything on the Internet with some suspicion. It might be some nut like me blogging at you.

Got to hand it to Matt Drudge, you never know where he’s going with his links. Could be a British tabloid, could be some news service you never heard of, or could be another blog (since technically, the Drudge Report is a blog consisting entirely of links to stories).

Here’s a recent example:

“Money by the barrelful, by the truckload. Mountains of money, heaped like gassy pyramids in the national dump. Scrounging packs of politicos, snapping, snarling and sending green bills flying sky-high as they root through the tangled mass with ragged claws. The stale hot air filled with cries of rage, the gnashing of teeth and dark prophecies of doom.

“Yes, this grotesque scene, like a claustrophobic circle in Dante’s Inferno was what the U.S. government has looked like for the past two weeks as it fights on over Barack Obama’s stimulus package — a mammoth, chaotic grab bag of treasures, toys and gimcracks. Could popular opinion of our feckless Congress sink any lower? You betcha!”

That’s the lovely and talented Camille Paglia on Salon.com. She really has a grasp of the sensuality of life. There’s a lot more to the entry, including buxom foodies, frocks for the ages, and the eternal appeal of Mary McCarthy and Justin Timberlake.

Then today, I followed a Drudge link and ended up at another blog universe, The Huffington Post. Got myself registered using my Facebook sign-in, which was strangely wonderful synergy, and I’ll be commenting over there frequently, I think.

So follow your links, wherever they take you. That’s what the World Wide Web is for.

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We're building hospital additions and academic buildings all the time in Madison. The contruction crane is our state bird.

At last, I find some context on the current downturn in the economy. Is our present economic situation really comparable to the Great Depression? Apparently not, if we can believe Bradley R. Schiller, economics professor at the University of Nevada, Reno, who had a piece in the Wall Street Journal today.(I’d give you a link, but it’s paid content and the link would only last a week.)

He wrote: “Our current economic woes don’t come close to those of the 1930s. At worst, a comparison to the 1981-82 recessions might be appropriate. In the last year, the U.S. economy shed 3.4 million jobs. That’s a grim statistic for sure, but represents just 2.2% of the labor force. From November 1981 to October 1982, 2.4 million jobs were lost — fewer in number than today, but the labor force was smaller. So 1981-82 job losses totaled 2.2% of the labor force, the same as now.

“Job losses in the Great Depression were of an entirely different magnitude. In 1930, the economy shed 4.8% of the labor force. In 1931, 6.5%. And then in 1932, another 7.1%. Jobs were being lost at double or triple the rate of 2008-09 or 1981-82.”

Here’s his comparison of unemployment rates: 7.6% now, 10.8% at the 1982 peak, and 25.2% at the 1932 peak.

How about decline in the gross domestic product (GDP)? Well, GDP “actually rose in 2008, despite a bad fourth quarter. The Congressional Budget Office projects a GDP decline of 2% in 2009. That’s comparable to 1982, when GDP contracted by 1.9%. It is nothing like 1930, when GDP fell by 9%, or 1931, when GDP contracted by another 8%, or 1932, when it fell yet another 13%.”

Then there are the bank failure stats: A couple of dozen in 2008, compared to 3,000-plus Savings & Loan failures in 1987-88, and over 10,000 bank failures in 1933.

Stocks? Try a nearly 90% devaluation in the early 1930s.

What I’m getting at is not meant to demean or diminish present-day problems. Everyone who is unemployed is worried and the rest of us don’t know what to think of the future. But let’s not suffer needless worry because inflated political rhetoric makes things seem way worse than they really are. A little cheerleading from the “bully pulpit” would be appreciated. I mean, who even remembers the 1981-82 recession?

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When I went to sleep last night, I didn’t check the news, or I would have known that there was a compromise in the U.S. Senate on the so-called stimulus bill.

Despite my earlier skepticism, I now have hope for this idea — to spend and borrow our way out of a recession.

The trouble with economics, well, one of the troubles, is that you have to conduct your experiments in real time, using real economies and real people. if you’re wrong, millions of lives are affected. Looking back on past economic activity only gives you some clues, which is why economists have such widely varying opinions on things. As the joke goes, if you have five economists in the room, you’ll get six opinions.

But know this — if Uncle Sam is borrowing a trillion dollars and spending it, that’s a trillion that won’t be available to businesses. And if we simply print another billion bucks, the value of all dollars will be diminished, interest rates will go up, and you savings will be worth less. These are immutable laws, and that’s what scares me about the stimulus. Good luck to us all.

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It’s finally Friday, and there’s no theme today. It was an intense week where I do my day job. The picture of the mail slots there gives you some idea of both the size of the place, and the tone of clean efficiency. (I won’t tell you where I work, not yet. It really doesn’t matter for the purposes of this blog.) I do marketing copy, if you know what that means. Then I do tax returns in the evening. Long days.

I got out of my second job at the tax office at 8:00 and picked up Jane for dinner at our favorite Indian restaurant – I should’ve taken a picture. Then we finished watching the first and some say the best French Canadian film, Mon Oncle Antoine(1971), directed by Claude Jutra, who was the subject of a documentary on the second DVD. He palled around with the French New Wave, won some awards, but ended tragically. I’m big fan of experimental movie makers, but hadn’t heard of Jutra.

The stimulus plan wasn’t passed, and I’m hoping the debate goes on a bit longer, so that everyone is finally listening and realizes what fools we elect and how dumb we are to expect them know anything and save us from ourselves.